Which is a one-sided argument, Tantillo said.

 

“I appreciate it,” he said. “And if I was president of the United States, I would be pushing U.S. exports, too. But it’s not that simple. It’s about exporting and importing. It’s about getting that balance right. But, we always seem to hear one side of the statement.”

 

But because both sides have a burden, and the public doesn’t believe anything gets done in Washington, they are on a mission to prove otherwise – and trade and the TPP are at the top of the list, he said.

 

NCTO’s stance

 

If and when the TPP is finalized, Tantillo and his NCTO colleagues and members have been working hard to make sure they get this agreement right. As highlighted on this website on several occasions, the U.S. textile industry has pushed the government to include three crucial requirements in any deal:

 

• Fair and reasonable rule of origin;

• Fair market access rules and tariff elimination formulas; and

• Strong and effective Customs enforcement rules.

 

First, the rule of origin must be determined. What is the requirement for the manufacturing process in order for a product to get the special benefit (duty-free treatment)? The NCTO argues that the majority of production for a textile and apparel item should be done within the TPP region in order for it to receive duty-free treatment. It argues that because most U.S. textile manufacturers are component material producers.

 

“And it doesn’t do us a whole lot of good if it says all you have to do is the final assembly,” Tantillo said. “If that’s the case, then the Vietnamese will continue buying yarns and fabrics from China and ship that finished product into the United States duty free, displacing U.S. production and hemispheric production that may be using your yarn and fabric.”

 

Tantillo credited the U.S. government for adopting the NCTO’s proposal for a yarn-forward rule of origin and for sticking to its guns throughout the negotiating process. And that has caused Vietnam to switch tactics by seeking major exceptions to the rule. But such a “Swiss-cheese arrangement” doesn’t provide broad-based coverage to the U.S. textile industry and threatens to make it a yarn-forward rule in name only, he added.

 

Secondly, how quickly should duty-free treatment be given? Overnight or through a phase-out? The NCTO has pushed the U.S. government for a 10-year or longer phase-out on “sensitive” products, and the U.S. government has proposed a three-basket system, where duties would be phased out in one of three stages – either immediately, over five years, or 10 years or more.

 

“And these are the tough choices that our government asks us to make,” Tantillo said. “We have to determine what’s really important. And, of course, we have to do a ton of economic analyses to show where the investment, the production, the employment and the exporting is from our industry in order to convince them that this product is too important to the U.S. economy not to get some level of a phase-out.”

 

And finally, Customs rules are imperative to ensuring all parties are playing by the rules, and the U.S. government is generally willing to include adequate enforcement rules into the agreement, he added.

 

The Vietnam threat

 

Vietnam has major advantages through its non-market economy, including state-owned enterprises and state-sponsored subsidies. Vietnam’s apparel production is voluminous and is heavily subsidized by its government. In fact, it’s largest apparel exporter, VINATEX, is owned by the state. Additionally, the country has lax intellectual property laws and lax investor/arbitration laws.

 

All of these facts make tariff phase-outs necessary, Tantillo said.

 

The U.S. also is pressing Vietnam to transform from a state-controlled model to one that is more market-driven, he said.

 

“And they’re saying to us, ‘well, what are you going to give us to do that?’ ” Tantillo said. “And, of course, it always circles back to each of us in this room because what they want are textiles, apparel and footwear commercial assets.”

 

The big question, he added: Is Vietnam really willing to undergo basic structural economic and social reforms that the U.S. already lives under? The Vietnamese have very different views on such things as investor and arbitration rights and intellectual property and government ownership.

 

“What we’ve tried to explain to our government is do we actually believe they are going to transition from a state-controlled economic model to something that’s more market-driven overnight?” Tantillo said. “Obviously, that’s not the case. They are going to take their sweet time phasing out state-owned enterprises and state-owned subsidies, if they actually do. It’s going to take them awhile to adopt more realistic intellectual property and investor laws that bring them to some sort of equilibrium with others and us within the TPP. They need time to phase in their changes, so we should have time in order to adjust to a greater and greater level of aggressive competitiveness coming from some of these TPP partners.”

 

A lot of work has been done by the NCTO on behalf of the U.S. textile industry, and more remains in order to get the TPP to a point that this manufacturing sector can live under it, Tantillo said.

 

"We’re engaged in a very intense fight to convince policymakers that this agreement only works from our perspective if everybody in the production chain gets a little piece of the pie,” he said.